14
May

Amazon Selling – Finding A Great Product For Easy Private-Labeling

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Amazon Selling

● Go for a product that’s capital friendly and risk averse

● Look out for the signs of viability and sustainability

● Be sure the market has a pretty good potential for growth

● Conduct a quick and real-time product saleability test (optional)

This is arguably the most important step in the entire process, and that’s for a good reason. If you select the right product (from the onset) virtually everything else will become easier. But when you choose the wrong product, all other efforts (regardless of how correct they are) would be like placing the right ladder on the wrong wall. Thus, though it’s not advisable to get stuck in a search for the “perfect” product, you really need to nail the right product pretty early, not later.

So, going by our earlier example in my book, we will now try to illustrate the product selection process with a product from the “Dogs Supplies” niche. Again, I like the way Josh did this in his case study. Basically the process can be broken down into three main steps (plus a few other smaller steps under each main step) as follows.

● Capital friendliness and risk averseness

● Decent signs of viability and sustainability

● Good potentials for scalable growth

Now let’s walk through each of these three steps one after the other.

STEP 1: Go for a product that’s capital friendly and risk averse

I) Negligible selling price

As a new (and non-US resident) Amazon seller, you want to make sure your product is both top notch quality and competitive. But in this case you’re not only looking to be competitive. You also want the price of your product to be negligible. In other words, you want to sell a profitable product that folks can buy at impulse without thinking about the cost.

Usually most products within the price range of $11 – $49 would fall into this category (without coming across as an add-on item). Of course launching your business with a product that’s within the aforementioned price range is essential for a few vital reasons. One of such reasons is that it helps to keep the cost of inventory low. This automatically lowers the financial barrier-to-entry and helps to minimize risk.

II) Risk Aversiveness

The average American consumer can sue for damages due to a defective or otherwise unsatisfactory product. This alone can lead the brand to a huge loss. But the risk can be drastically minimized if your price is negligible and your product does not injure or otherwise harm its user in anyway. And thus, to further minimize the risk of loss, you should look for a product that complies with the following three features.

I) Simple, singular function, and straightforward to produce

You don’t want to start your private-label business with a complex product (like electrical/electronics). Doing so can open up lots of regulatory and compliance issues which may be hard to handle. Instead you should first start with a product that has a single function, and can easily be mass-produced. For example, something as simple a Jumping Rope or a Dog Leash can make a good start.

2) Super durable, unbreakable and tough

You are going to put your products on transit so many times. And, sometimes, the movement will be across the atlantic. So you don’t want to start freaking out about damaged goods from day one. This is why you want to go for a product that will withstand the complicated pressure that’s typical in international shipping. The examples of Dog Leash and Jumping Rope are still valid here.

3) Lightweight and appropriately sized for air shipping and stocking

Although you may have your product exported from the factory by sea, the bulk of other deliveries (especially to the buyers) will be by air. And air shipping costs can add up pretty fast; likewise warehousing. So you want to make sure your product is lightweight to avoid costly surprises. The recommended unit weight (including packaging) is less than 3 pounds.

You can learn more about Amazon product weights and sizes here[1]. To get an idea of what your product should weigh, just look up a similar product on Amazon and scroll down to where it says: “Product Details”. You would see several stats about the product including its shipping weight. And, as you can see from the following screenshot (figure 18), some products weigh less than 1 pound.

[1] “Amazon.com.” https://www.amazon.com/gp/aw/help/id=201119390. Accessed 27 Jan. 2017.

Now, before moving to the second step, keep in mind that we are looking for a simple product that’s priced between $9-$49. And it must be durable, lightweight; and must have just one function.

How do we find a product that meets the aforementioned criteria?  Here’s the process:

1) Go to your chosen Amazon primary and secondary niches (for our example, we chose Pets Supplies and Dogs, respectively)

2). Go through the subcategories in your secondary niche. Look for a subcategory that has several products ranking on the to 2%-3% (usually less than 10,000 Amazon Sales Rank). And when you find such a category, you want to make sure it has at least three products on the first page with less than 50 reviews each. (See figure 9).

I followed the above procedure and discovered that Dog Shoes (or paw protector) is looking promising. It actually has it’s own category with a bunch of low-review products listed on the first page. In fact one of the first-page products got a 3.5 star from only 23 reviewers, yet it had a sales rank of about 5000 in Pet Supplies (see figure 18). That sounds like a decent potential with low competition. So let’s check it out for viability and sustainability.

STEP 2: Look out for the signs of viability and sustainability

The only time you would be be 100% sure that a potential product is viable and sustainable (or not) is when you start selling it. But before then we can only gauge any Amazon product for signs of viability and sustainability. Call it an informed guess work.

Basically there is a two-step formula to gauging the viability and sustainability of any niche/product.

I) Consistency of Interest

You want to make sure there is a solid (time proven) interest in your product/niche. One way to find out is Google Trends. Just plug your product/subcategory keyword into Google Trends to see how trendy the product/niche is. The promising products/niches are those that attract reasonable but consistent level of interest all year round. You certainly don’t want to mess with seasonal products or those that show erratic spikes and decline of interests.

So, a quick run on search trends for Dog Shoes shows that there’s a decent level of consistent interest in the product worldwide.

Amazon Selling

But a  review of the Google Shopping trends shows that there’s been a rising interest in Dog Shoes since the past one year.

Amazon Selling for International Sellers

Dog Shoes just passed the test on consistency of interest. Now let’s try to quantify this interest in real numbers. We will do that by finding out how many searches this keyword gets on Amazon each month. Of course you can do the same thing with your own product keyword.

If you haven’t already check out my book ‘Amazon Selling The Ultimate Guide Step-By-Step Guide‘  where I cover all the related topics on how to get launched and start selling your product on Amazon.

II) High Volume Keywords on Amazon Search

This is a huge viability/sustainability indicator. In fact, Josh recommends to make sure that, when combined, your top three keywords gets at least  100,000 searches monthly. But, unfortunately Amazon does not have any keyword research tool that can give you search figures. So, only Merchant Words seems to have that capacity. And it’s designed strictly for Amazon.

Amazon Seller Merchant Words

Merchant Words costs $30 per month. Thus, a free usage may only show you the data for search volume and primary category. But it will hide the related keywords or search terms (as shown in figure 21). However, you may use other keyword suggestion tools tools like Keyword Keg and Ubersuggest to uncover the related search terms/keywords used on Amazon. (I did not mention Google Keyword Planner because it does not pull data from Amazon, though quite useful).

But here’s one caveat to note:

Merchant Words may return up to 5x or more search volume figure (on virtually any given keyword) than what’s presented by any of the three aforementioned tools. It’s speculated that this is because Merchant Words (more than the other tools) has deeper access to Amazon search data[1].

Regardless of how you do this, you want to be sure that a combination of your top three keywords gets up to 100,000 searches per month. Then the next thing is to check the growth potential of your brand in that niche.

STEP 3: Make sure there’s a good potential for scalable growth

Potential for future growth should be a major part of your product selection criteria. Recall that the opportunity for scalable growth was the most vital reason for our choice of business model .  we mentioned some of the things to look out for when choosing your niche – such as the combination of a decent demand and a weak competition. 2).

That’s where we talked about the need to gauge the rates of demand and competition in your prospective niche (or subcategory) before settling for it. This is crucial because the future growth (or decline) of your Amazon business will be directly determined by the rate of demand and competition that’s in your niche.

In addition to consistent decent demand and weak competition, we also mentioned the need to stay away from seasonal products. This is especially critical when you’re just starting out. You want to choose a product that can be sold daily and at all times throughout the year. Those are all parts of the factors that will help to scale up the growth of your Amazon business.

Growth is not only about revenue

Growth (in this context) does not only mean some increase in sales revenue. Of course that’s a major part of it, but there’s more to it too.

Essentially, growth also implies becoming a dominant brand in your subcategory (for example, Dog Shoes). It also means growing all the way to topping your primary niche (for example, Pet Supplies). And, of course, it includes having multiple fast moving products and some best selling items under your brand name. But to get there you need to start with (at least) one hot product that has an obvious potential to give your brand a shot at scalable growth.

So, in addition to the aforementioned factors, here are three other factors that can help to make your growth scalable:

1) Multiple product keywords

The presence of multiple search terms/keywords for a single generic product is a good sign of high demand. But it’s also a sign of multiple

growth paths. Sometimes it shows that your product can be innovated to meet more needs. However, it can also be an opportunity to create multiple varieties of the same product in the future (if the various search volumes are huge enough). And that’s a clear path to niche domination. So, while choosing your product, you should consider looking out for multiple keywords. Our hypothetical “Dog Shoes” is a good example of a product with multiple keywords and search terms, as shown in figure 22:

2) No known name-brand to compete with

Starting out in a subcategory that has a name-brand is like planting your seed under a huge tree. The plant will likely experience a stunted growth due to limited access to sunlight. So I would rather be wary of picking a subcategory that has any known brands already in it. For example, I’d reconsider selling in the Dog Shoes/Boots subcategory, if brands like, say, Nike or Adidas are in it already.

3) Easy & dead-cheap sourcing

Your chosen product needs to be both easy and ridiculously cheap to produce or source from suppliers. This, in addition to all the earlier mentioned factors, will help to make the growth of your business super scalable.

For example, easy sourcing entails quicker production turnaround time and faster stock replenishing. Similarly, a ridiculously cheap unit cost could very quickly translate to higher profit margins and stronger competitiveness. It may even become your brand’s quick route to larger inventory and bigger marketing/advertising budget.

But I’d like to reemphasize here that it’s cool (as a non-US resident seller) to start your Amazon business with a simple product. Reason is, simple products are usually easy to source at ridiculously cheap prices.

Fortunately, as we mentioned at the beginning of this article, it’s pretty straightforward to determine what a simple product is. In fact I like the way Josh summed it all up in figure 23:

Amazon Selling for International Sellers

So there it is. The next thing now is to navigate the sourcing and prepping process. But before that, let’s recap the product selection process.

Recap of Amazon private-label product selection process

  1. Make sure it’s capital friendly
    – Selling price should be between $9 – $49
  2. Make sure it’s easy to ship
    – The weight should be super light (preferably less than 3lb)
    – It must be tough; and hard to damage in transit.
  3. Make sure the competition is not hard
    – No existing known brands in your chosen subcategory
    2 or more similar products on first page (with less than 50 reviews)
  4. Make sure it has decent and sustainable demand
    – Similar products in top 1% Best Seller Rank (in the main category)
    – Top 3 keywords have over 100,000 monthly searches (at merchantwords.com)
    – Can be sold year-round (not seasonal).
  5. Make sure it has potential for scalable growth
    – Has multiple product keywords
    – Potential for better innovations
    – Potential to expand with multiple related products
  6. Make sure the profit margin is high enough
    – At least 75% margin or more

    Conduct a quick and real-time product saleability test

    But as mentioned earlier, in addition to your research, it’s a good idea (but not compulsory) to have a personal transactional proof that you can actually sell your chosen product on Amazon (before investing heavily into it). And, going by our preferred business model, you can achieve this by purchasing a quick sample of the product (not more than 5 units) from AliExpress and then listing it on Amazon to see how it goes.

    For those who’re not yet aware, AliExpress is a huge China online retail brand. It’s just like the retail side of Amazon. So, unlike Alibaba (which we will discuss in detail shortly) AliExpress rarely have a high Minimum Order Quantity. Thus you could purchase just one unit of any item on AliExpress and have the item shipped to your desired address in days.

    As a non-US resident seller, you can make an arrangement with a US-based FBA prep agency (more on this shortly). The idea is to have AliExpress ship the few units of your chosen generic product to the FBA prep agency. Then, the agency will prepare the product for FBA (they will label and package it according to Amazon’s standard) and then ship it to the relevant Amazon warehouse, as per your instruction.

    Alternatively, you can have AliExpress ship the test units to your country of residence first.  You can then personally label and package the test products before forwarding them to Amazon’s warehouse in the US. However, while this approach will save you the cost of third party labeling and prepping service, it will also create a double international shipping scenario (from AliExpress to your country, and then from your country to the US) which is likely to cost you more money.

    However, if you did a good job on your research and tests, you’d have a strong conviction that your chosen product stands a good chance to sell well on Amazon. And once that conviction is there, the next thing is to take up  some inventory from a competent and credible manufacturer.

    But note that having the desired manufacturer/factory in your home country (or country of residence) would be a major advantage. However, that’s rarely the case for many people. Most Amazon private-label sellers don’t have that privilege. And, for that reason, the majority of private-label sellers source their products from China. And when it comes to sourcing from China, Alibaba is usually the major starting point.

If you’re looking for more help with Amazon check out my book ‘Amazon Selling The Ultimate Guide Step-By-Step Guide‘ where we deep dive into how to sell on Amazon for international sellers.

Don’t forget to check out our blog at here and if you have any questions reach out to me personally at tarsenault@shopidd.com

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